The correct option d. All of the above are correct; for the sales of gasoline in local gasoline station.
Define the effect of price on sales?
According to the law of demand, for almost all things, demand decreases as price increases.
- In other words, if prices are raised, sales will decrease. Higher prices can, however, also translate into greater profits.
- The concept of the price effect examines how market prices affect consumer demand.
- Businesses may find it useful to analyse the pricing effect when determining the price at which to sell their products and services. Buyers often buy less when prices increase and vice versa if prices decrease.
Because your neighbourhood gas station
- has little or no market strength, its sales of gasoline would significantly decline if it increased its price by 20%.
- is little in comparison to the magnitude of the market for gasoline.
- is a business that competes.
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